Per Shri K.S. Venkataramani :

M/s Himson Textiles Engineering Industries Pvt. Ltd. had entered into an agreement with M/s Reiter-Scragg Ltd. (Scragg) on 01.10.85 for manufacturing and selling of the Super High Speed Draw Texturising Machine Model SDS 1100 and DCE 1200".

M/s Scragg grants M/S Himson rights and powers to manufacture and sell the products, licence to use in India any Patent rights which M/s Scragg possess or may come to possess as regards the processor on the machines and all necessary licences under Patent rights. Royalty/lump-sum paid under this agreement shall constitute full compensation for use of patent right. Right to use trade-mark was also granted to M/s Himson Textiles.

The Buyers were to make payment in the form of a lump-sum know-how fees of 60,000/- Pounds Sterling (net of Taxes) and royalty equal to five percent of the net invoiced sale price of all Machines and Parts for the machines sold by M/s Himson in India and 7.5% on export subject to taxes for a period of 5 years.

The Assistant Collector of Customs GATT valuation Cell has observed that the foreign collaborator was in a position legally or operationally to control various areas such as design, s